WEBVTT

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As last recorded
by the US Federal Government,

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the median wealth for a white family
in the United States was 171,000 dollars

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and the median wealth for a Black family
was just 17,000 dollars,

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a 10x different over 150 years
after the end of slavery.

NOTE Paragraph

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I think first we have to ask ourselves,
what is wealth really?

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Well, wealth is all of your assets,
all of the things that you own,

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minus all of your liabilities.

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Assets are things like your car,
your house, your savings account,

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your checking account, your investments,
if you own other properties,

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your business.

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Well, that gap, that 10x gap,

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is partially because for many years,

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decades in fact,

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Black Americans
were left off of that ladder

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and didn't really have access to it.

NOTE Paragraph

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Well, why are we talking about this now?

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Well, in 2020, in the midst of
a global pandemic and a looming recession,

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inequities are really laid bare

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across nearly every system
in the United States:

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health care, education,
criminal justice and finance,

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and people were moved
to take action online, in streets,

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in meetings at work,
in corporate boardrooms.

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And I, as a consultant, started
having conversations with clients

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that I thought I would never have.

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I guess the question
that I'd been asking myself is,

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how do we make sure that in this moment,
this results in action and progress

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that starts to close that wealth gap
for Black versus white Americans?

NOTE Paragraph

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So who am I?

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My name is Kedra Newsom Reeves.

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I am a consultant
for banking institutions,

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hedge funds, asset managers.

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But before any of that,

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I am a Black American
who is the descendant of slaves.

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And when we talk about the wealth gap,

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it's really important
to understand the history,

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so I thought I'd tell a little story
about a family, my family,

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and how policy intersects with wealth.

NOTE Paragraph

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So we'll start with
my great-great-grandfather.

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He was a man named Silas Newsom,

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and Silas was born a slave
outside Nashville, Tennessee,

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on Newsom Station,

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where he and his family
worked on a quarry.

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He didn't own anything.

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He didn't own his home.
He didn't own property.

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He didn't really even own his own body,

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his own labor, his children.

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Any of those things, all of those things,

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were here to create wealth
for someone else.

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So we believe that he was a servant

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during the Civil War
for a Confederate general

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who was actually fighting
to keep him enslaved,

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so he really had no wealth,
he had no control over his life.

NOTE Paragraph

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Well, at the end of slavery,
there was a policy opportunity.

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There was a question:

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what do we do for
the hundreds of years of slavery

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now that we are ending slavery
and the country is coming together?

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And there was a choice.

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We could make a settlement
with the slaves,

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or we could make a settlement
with the slave owners.

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Well, the slaves had no power
to advocate for themselves in that moment,

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and the country had to be united,

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so the federal government decided
to give that settlement to slave owners,

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essentially giving them money
for the property that they had lost

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at the end of the war.

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And not their physical property,
not their homes, but people,

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the slaves that had provided
free labor for years and decades.

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So Silas, at the end of the Civil War,

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had no wealth.

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He was free but had no wealth.

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He became a sharecropper.

NOTE Paragraph

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My great-grandfather Silas was born

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a number of years
after the end of slavery,

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and he was drafted to serve in World War I

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along with 350,000
other Black American soldiers

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in segregated units.

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He served in the war.

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When he came back to the United States,

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at the end of the war,
there was very anti-Black sentiment.

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The economy was compressing,
there were a lot of stressors,

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and Black people could not get land,
they could not get loans for homes,

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they really could not acquire any credit
to build wealth over time,

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so he also became a farmer.

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And he had a son, also named Silas --

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there are a lot of Silases in my family --

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my grandfather.

NOTE Paragraph

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My grandfather Silas was also a soldier
and fought in World War II.

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After World War II,

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the US Federal Government
passed the GI Bill,

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which provided support for veterans.

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And the bill provided
for building of hospitals,

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student loans

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and, most importantly for wealth-building,
low-interest home mortgages for veterans.

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In the years following the war,

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the GI Bill accounted for
four billion dollars of funding

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to nine million veterans.

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But Black veterans
largely did not benefit.

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So Silas, my grandfather,
came back to Nashville, Tennessee,

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and he married my grandmother,
whose name is Cinderella.

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Yes, my grandmother's name was Cinderella.

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And they had eight children.

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But they never bought a home.

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And the highlight of their housing journey

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was moving into
a new public housing project

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with their children

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and paying rent for that housing project,

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which in terms of the quality of housing
was fantastic for them and a step up,

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but did not allow them to build wealth.

NOTE Paragraph

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My father, another soldier,

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a 20-year veteran
of the United States Marines,

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bought his first home in his early 50s,

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but it took four generations
for our family to move into homeownership

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and begin to build ownership
and equity in a home.

NOTE Paragraph

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That's one family's story,
and I skipped a lot of things

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that happened between
the end of slavery and today:

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redlining, housing discrimination
before the Fair Housing Act in the 1970s,

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the really important role
that Black-owned banks played

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in building Black communities,

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the Savings and Loan Crisis of the 1980s,

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which crushed a lot of Black banks,

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and the subprime crisis in 2008,

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which stripped a lot of Black
and brown homeowners of their homes.

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There's a lot of history there,

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but that story tells you a bit
about how we get to this 10x gap

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where we are today.

NOTE Paragraph

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Now, certainly, as we think
about the size of that gap,

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it is critical for the Federal Government
to take a number of actions.

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That said, financial institutions
play a really important role

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in providing access to credit,
access to capital,

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to build communities

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and allow Black communities to thrive.

NOTE Paragraph

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We have to be clear;

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managing 17,000 dollars better
does not get us there.

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Better education does not get us there.

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Access to credit and capital are critical.

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So I want to talk
about four solutions today

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that financial institutions can contribute
to start to close the wealth gap.

NOTE Paragraph

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Number one is getting
more people on the ladder,

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getting more people banked.

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We know today that
about half of Black Americans

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are un- or underbanked.

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Unbanked means that
you don't have a banking account.

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Underbanked means
that you have a bank account

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but you use alternative services
for check-cashing or payday lending

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or paying bills.

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And that's not just expensive
from a transaction perspective

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in terms of the fees that you pay,

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it's also expensive in terms of the time
that you commit to paying a bill.

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Think about how you pay
your utility bill today.

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It probably comes
out of your checking account.

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You don't even think about it.

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You set it up in advance,
and it's automatic.

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Well, if you're unbanked,

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you are probably going
to get a money order somewhere,

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physically, a piece of paper.

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You then travel to City Hall or your DMV

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to pay that bill.

NOTE Paragraph

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About 40 percent of people
who are unbanked

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say they are unbanked because they think
they don't have the minimum amount

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to really maintain a checking account.

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Well, that's just not true.

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In the last several years,

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credit unions, community banks
and major banking institutions

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have created low-cost, no-minimum
checking and savings account products

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specifically made for this population.

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So we have an issue with awareness.

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Banks, community partners and others

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have to work together to increase
the awareness of these products

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in communities that need them,

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so that we can start to reduce
the number of people

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who are un- and underbanked

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and get them on the ladder
that we talked about earlier.

NOTE Paragraph

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The challenge is about 28 percent
of Black and Latinx families

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are credit-invisible,

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which means that you have
a thin credit file or no credit file.

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And the way that credit works
and creditworthiness assessments work

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is to say, if you can prove

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that you have paid credit back
consistently previously,

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then I can lend you more credit.

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It's kind of a chicken
or an egg situation.

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The interesting thing is that banks
and financial technology companies

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have really innovated in recent years
to use alternative data --

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cable bills,

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utility bills,

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rent payments, etc. --

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to show that you're able
to consistently make payments.

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The additional challenge on this one,
unlike the last one,

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which was more about awareness,

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is that you need to have
regulatory support to do these things.

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You need to prove to regulators

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that you are able
to fairly use alternative data

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to lend credit to marginalized groups.

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What we need to see is,
from the Federal Government

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and the banking industry,

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to come together
to create innovation sandboxes

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to start to use alternative data
to expand to marginalized groups.

NOTE Paragraph

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Well, what about communities?

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Without community wealth,

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individual wealth, in a way,
is on an island.

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And if you go into most
major cities in the United States

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to most communities of color,

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what you'll find
is underinvested communities.

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For every economic crisis,
these communities have suffered severely.

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For every economic boom,
they have not benefited.

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And so what we're seeing
in a number of cities across the country,

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and I'll use Chicago as an example,

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is the partnerships occurring

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between banking institutions,

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philanthropists,

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the city and community leaders

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to invest hundreds of millions of dollars

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to build community resources

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and communities that have
historically been disinvested.

NOTE Paragraph

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Lastly, we've got to talk about business,

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and not just small businesses.

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Now, when you have individual stability
and a banking institution,

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and you have access to credit,
and when you have community wealth,

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those are all fantastic things,
but we need also job creation.

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Take all of the new tech companies,

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and I say "new" because now
they're not so new,

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but take Facebook, Google, Amazon.

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At some point, all of those companies
were sole proprietorships

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with one employee

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or a few employees

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that were building a technology
that was not yet proven.

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What those companies received early on

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was venture capital money.

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And when you look
at venture capital today,

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only one percent of venture capital funds
go to Black founders.

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So if Black entrepreneurs
are largely shut out of those networks

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they're not able to grow,

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and the only way for that to change

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is from within the industry itself.

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In this generation, we must not only
be talking about thriving businesses

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in Black communities.

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We must also be talking
about seeing more Black-owned

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and founded businesses going public.

NOTE Paragraph

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Those are just four solutions.

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There's many other things
that can and should be done

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to close the wealth gap.

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This gap is not new.

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It was born and perpetuated
by federal policy, social constructs

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and business practice over time,

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and all of those things need to change

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to start to close the gap.

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Financial institutions
play a really critical role

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at the individual level,
at the community level

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and at the business level.

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It's important to our families,
it's important to our communities

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and it's important to our economy.

NOTE Paragraph

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Instead of talking about
how the gap continues to grow,

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let's begin to close the gap now.

NOTE Paragraph

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Thank you.